At a press event on Friday, Ford Motor Comp. (F) unveiled its new advertising plan to target 160 million Americans that fall into either the "millennial" (aka "Generation Y"; born in the early 1980s to early 2000s) or "baby-boomer" (born between 1946-1964) generations.

I. Ford Guns for Gen. Y, Plugs Zipcar Partnership

Ford's new campaign will focus on the so-called "super segment" which includes small cars, midsize sedans, and small utility vehicles. The segment accounted for only 35 percent of Ford sales in 2004, but as customers have moved towards smaller vehicles Ford today sees it account for 50 percent of sales.

The automaker has excelled in recent years, behind only General Motors Comp. (GM) in U.S. sales. In fact, all of the U.S. automakers have done well -- Chrysler LLC is in third place, while Toyota Motor Comp. (TYO:7203) and Honda Motors Comp., Ltd. (TYO:7267) have fallen behind in U.S. sales. Strong growth in the super segment has saved Ford, sustaining its U.S. growth, while sales have slumped in Europe. "Super segment" models include the (re-introduced) Fiesta, Focus, Fusion, and Escape.

The automaker acknowledges that the large millennial generation represents a risk, with more of them living with their parents or having lower incomes, but says it's confident it can appeal to them as they settle down and have children.

Ford's Group Marketing Manager Amy Marentic remarks, "Millennial want a vehicle that looks great, but at the same time are sensitive to things like value, fuel efficiency, technology. [They're] not going to be brand loyal to what their parent did.... When they drive up to the club they want to look fabulous... Just like their cell phone, just like their shoes... they want their car to make a statement about them."

The company views its partnership with Zipcar Inc. (ZIP) as a crucial piece of effective advertising to Generation Y buyers. Ford Sales Analyst Eric Merkle says that when Gen. Y buyers graduate from colleges they're used to driving Ford via Zipcars, which mostly are Ford Focuses, with a few Escapes mixed in.

He says that some will move to cities -- where more Ford Zipcars await -- while others will opt to move to the suburbs and buy a vehicle for commuting. He says those buyers are more likely to buy a Ford.

In total, Zipcar's Ford fleet logged 2.2 million driver hours last year, with about 700,000 drivers.

II. Manuals Seeing Strong Sales Among Younger Drivers at Ford

In an interview Eric Merkle was asked about how Ford would react to manual drivership decreasing in younger buyers. Mr. Merkle disputed that premise stating, "Oh no, [Millennials] do really like to drive manuals. I really think that you're starting to see the manual starting to come back."

He supports his claim with sales figures. He says approximately 12 to 23 percent of Ford Fiestas sold per month (as many as 1 out of every 5 sold) and 9 to 17 percent of Focuses sold per month come with manuals.

Around one in five Focus and Fiesta buyers pick manuals some months.
[Image Source: Automobile Magazine]

While he did not cite a breakdown by generation, the Focus and Fiesta are cars that are thought to do quite well with Gen. Y buyers, so his claim may well be accurate.

I asked her why the disconnect then, by Consumer Reports, when they are supposed to predict how consumers will react to a vehicle in terms of satisfaction. She responded, "That's true. That sounds like a good question for Consumer Reports."

Responding to my inquiry about whether the criticism would soften amid competitors like GM introducing similar technologies in their vehicles, she predicted it likely would, commenting, "As the first mover you get a lot of love, and you get a lot of criticism. But everybody's going there [to infotainment]. It is the future."

IV. CAFE Quandaries and Looking Ahead to the 2014 Fiesta Mix

I asked Ms. Marentic if she worried about the demand for smaller vehicles to backfire if it flips in coming decades, as automakers may have grown more complacent with regards to tough CAFE increases, such as President Obama's 54.5 mpg 2025 target. She said she didn't think so, arguing that Ford is always an industry leader in fuel efficiency.

The advertising campaign will kick off not long before the new 2014 Fiesta ST -- a performance-geared variant of the popular front wheel drive (FWD) subcompact -- hits dealerships the new Fiesta ST "hot hatch" hatchback will be driven by a 1.6L EcoBoost four-cylinder engine, with 197 hp and 214 lb-ft of torque, feeding into a six-speed manual transmission with overall steering ratio of 13.6:1 and increased roll stiffness at the rear axle. The hatchback is currently the sales leader in Europe in its segment.

2014 Ford Fiesta ST

Ford will also introduce a new fuel efficient 1.0L inline 3-cylinder EcoBoost Fiesta later in the fall. The engine block of the I3 is light enough to carry onto an airplane (around 50-60 lb, according to estimates).